Charles Ergen dish
Andrew Harrier | Bloomberg | Getty Images
Desch's “Seinfeld” strategy seems to have ended just as well as the actual show – with its ending being generally disappointing.
In 2011, Dish co-founder Charlie Ergen first mentioned the name “Seinfeld” on an earnings call, in response to an analyst’s question about his company’s mixed asset portfolio. Ergen noted that a half-hour episode of a 1990s sitcom typically begins with multiple plot lines with no clear direction, “but everything seems to come together in the last few minutes,” he said. “So I think in terms of where we're going strategically, you'll just have to wait and see where it all comes together.”
On Monday, assuming regulatory approval, the result was revealed.
EcostarDish, its parent company, sold the pay-TV provider to DirecTV for a nominal price of $1 and $9.75 billion in debt associated with the business. Shares of EchoStar fell more than 11% on Monday.
In recent years, Dish has tried and failed to transition into a nationwide wireless carrier, while seeing millions of pay-TV subscribers cancel streaming services and operators that include high-speed broadband, such as Comcast and Charter.
Dish and DirecTV combined have lost 63% of their video subscribers since 2016.
“Times have changed,” EchoStar CEO Hamid Akhwan said in an interview with CNBC on Monday. “The content distribution industry has been in decline, losing customers at a rapid pace.”
The company's enterprise value in turn declined.
When Dish and DirecTV discussed a merger in 2014, DirecTV had a market cap of about $40 billion, and Dish had a market cap of more than $28 billion.
DirecTV was sold a year later to AT&T for $49 billion in stock value. Dish remained independent and lost almost all of its value as its business dwindled and satellite television became increasingly obsolete.
EchoStar and Dish merged back together earlier this year after separating in 2008. The motive for EchoStar was to move Dish and its debt out of balance with $2 billion in debt due in November, CNBC reported last week.
Radio maneuver
When Ergen used to talk about Dish and his future path, he would sometimes extend his hand and extend his fingers, using them as metaphors for different paths forward. For years, he tried to pair Dish's pay-TV business with a wireless service, buying spectrum at auctions and petitioning regulators to allow its use.
Dish ended up acquiring Boost Mobile as a divestment from T-Mobile for $1.4 billion in 2019. However, without a partner, it was difficult for Dish to find capital to run its pay-TV business and build a national network to compete. with AT&T, Verizon and T-Mobile – Especially since the cash flow of satellite channels diminishes every year with the loss of millions of subscribers.
“We couldn't feed the (wireless) business properly,” Akhavan said Monday. “The company's focus in multiple directions was a distraction for management as well.”
The actual series finale of “Seinfeld” was widely panned compared to the show's best episodes. It's hard not to view this path for Dish as a similar disappointment.
Watch: Exclusive CNBC interview with EchoStar CEO about the Dish-DirecTV tie-up
